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PRESS RELEASE

(Source : Information Services Department)

Statement by the Transport and Housing Bureau on a meeting with REDA

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     A spokesman for the Transport and Housing Bureau (THB) made the following statement after a meeting today (December 21) between government officials and representatives of the Real Estate Developers Association of Hong Kong (REDA):

     Government officials led by the Permanent Secretary for Transport and Housing (Housing), Mr D W Pescod, held their third meeting this afternoon with representatives of REDA on the new demand-side management measures announced by the Financial Secretary on October 26, 2012, which aim to curb the overheated property market. To bring the new measures into effect, the Stamp Duty (Amendment) Bill 2012 will be introduced into the Legislative Council (LegCo) on January 9, 2013.

     During the formulation of the draft legislation, the Government has taken into account various views expressed, including those received from the LegCo Panel on Housing and Panel on Financial Affairs as well as those from the meetings/briefings we arranged for relevant stakeholders including the REDA.

     Key features of the Bill include:

* Definition of Hong Kong permanent residents (HKPRs): Holders of valid permanent identity cards under the Registration of Persons Ordinance will be considered as HKPRs under the amended legislation.

* Minor and mentally incapacitated persons: For a HKPR to be exempted from the Buyer's Stamp Duty (BSD), the HKPR must be the purchaser/transferee acting on his or her own behalf in the acquisition of the residential property, except where the HKPR is a minor or a mentally incapacitated person who, due to the lack of capacity to enter into legally binding agreements, must in practice require another person to act on his or her own behalf.

* Application of the BSD on companies: REDA, among others, has suggested that companies whose shareholders are all HKPRs should be exempted from the BSD. After careful examination, we conclude that it is not possible to derive an effective mechanism that can plug all the loopholes identified. However, we propose that exemption from BSD be allowed for the acquisition or transfer of a residential property between associated body corporates.

* Refund of BSD for redevelopments: The policy intent is that the BSD should not hinder redevelopment, whether the residential property acquired is for redevelopment into a residential or a non-residential property. Under the Bill, a refund mechanism will be put in place such that acquisition of residential properties for the construction of immovable properties will be exempted from the BSD, provided that the immovable property being constructed is completed within six years (with extension permitted if granted by the Lands Tribunal). The "six-year period" will start when the relevant developer has become the owner of the entire lot of the redevelopment concerned. The developer will be considered as having fulfilled the relevant "six-year" condition if it has obtained, within six years thereafter, the Occupation Permit in respect of the redevelopment.

* Mechanism to adjust Special Stamp Duty (SSD) and BSD rates by means of subsidiary legislation: Adjustments to the SSD and BSD rates are proposed to be made by means of subsidiary legislation subject to negative vetting by LegCo, in order to have the necessary flexibility to adjust the applicable rates (to zero if necessary) in a timely manner.

     The enhancement of SSD would further increase the cost of speculation and it is expected that the number of such transactions will continue to be very low, especially resale cases at the shorter end.

     The BSD should be effective in reducing demand from non-HKPR buyers, thereby according priority to meeting the housing needs of HKPRs under the current tight demand/supply balance in the housing market. Taken together, the proposals should help forestall a further build up of exuberance in the property market in the midst of global liquidity glut and exceptionally low interest rates, thereby safeguarding overall macroeconomic and financial stability of Hong Kong.

     The Bill will be gazetted on December 28, 2012. It proposes that the measures take effect on October 27, 2012. Inland Revenue Department will record all residential property transactions between October 27, 2012 and the date on which the Bill is enacted.

Ends/Friday, December 21, 2012
Issued at HKT 19:50

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